Knox County Criminal Court Judge Steven Sword said he would make a written ruling within a week about a violation of probation violation for County Trustee Mike Lowe Thursday, July 12, 2018. Michael Patrick/News Sentinel

“The state submits Knox County citizens deserve (priority),” Bright said. “He’s supposed to pay that money. He took this money … It’s clear he willfully failed to pay.”

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From the archives: Former Knox County trustee Mike Lowe apologizes for mismanagement of funds.
Michael Patrick/News Sentinel

'He is in full compliance'

Defense attorney Gregory P. Isaacs countered that Lowe “has paid the citizens of Knox County” nearly $50,000 since he confessed in 2015 to stealing what authorities allege was as much as $750,000 in kickbacks from ghost employees and his cut of a scam to overcharge taxpayers for title work.

Isaacs said Bright wouldn’t be trying to jail Lowe if he were a garden-variety thief instead of a former Knox County officeholder.

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Former Knox County trustee Mike Lowe in court for a violation of probation hearing for falling behind on his restitution payments. Friday, May 18, 2018. The hearing was reset for July 12. (Photo: Michael Patrick/News Sentinel)

“He is in full compliance,” Isaacs said. “I’d like you to find 10 other people on this docket who have paid what Mr. Lowe has paid. Mike has attended every probation meeting. Mike has not failed one drug screen. Mike has not been on a vacation. Mike is driving a truck that’s 15-years-old.”

Lowe was arrested in March after he wound up in arrears $13,450 in restitution payments. He posted that amount as bail and was allowed to go free pending a hearing. Sword did not rule Thursday, so he remains free.

Prosecutor keeps pushing

Sword had ordered Lowe to pay $1,850 each month toward a $200,000 restitution bill – the amount of which was negotiated by Isaacs as part of a plea deal and does not reflect the full scope of Lowe’s thievery during his tenure as Knox County trustee.

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Bill Bright, Knox County assistant attorney general, left questions Rhonda Jan Thomas, a former Knox County Trustee employee, about her criminal record. Thomas has been charged with theft and the case is still pending.
Testimony continued in the trial of Delbert Morgan, accused of being a ghost employee under former Knox County Trustee Mike Lowe, Friday, Aug., 22, 2014 in Knox County Criminal Court. Morgan, former employee Ray Mubarak and former Knox County Trustee Mike Lowe are accused of conducting a scheme in which Morgan and Mubarak were paid money by the office for work they never conducted.
Mubarak and Lowe will be tried later. (J. MILES CARY/NEWS SENTINEL)
(Photo: J. Miles Cary, J. Miles Cary/News Sentinel)

Under the terms of the deal, Lowe was officially sentenced to 10 years but went to jail for roughly seven months. He was ordered to spend the balance of his sentence on supervised probation. He’s been on probation since he was freed in the fall of 2015.

Bright wanted Lowe to cough up the entire $200,000 when he pleaded guilty in March 2015. Lowe claimed he’d gambled most of his money away and was too broke to pay a lump sum. Sword then set monthly payments.

'More than just a rent collector'

Lowe had been making those payments until June 2017. His niece’s husband – commercial pilot Thomas Madden – gave Lowe a job as “property manager” for his side business, Madden Investment Properties, when Lowe got out of jail, testimony Thursday showed.

“He’s more than just a rent collector,” Madden testified.

He said he pays Lowe $400 monthly “as gas money and stuff” and “12 percent of rent collections and new leases” as “property manager.” Madden said he had no idea how many hours Lowe works each month or even when.

“This is 24-7,” Madden said of the job. “I don’t know how you calculate hours. Do you calculate hours by when you leave your house? Do you calculate hours by how long you think about stuff?”

Bright showed Lowe put $29,500 in his bank account in nine months – after he dropped his restitution payments to between $200 and $500 months. Bright also showed that most of that money went to support Lowe’s lifestyle – a $300 monthly cable bill, for instance, and thousands each month for credit card bills.

But Isaacs countered that Lowe’s pay for an entire year would be less than $35,000 based on his 2017 earnings.

“This guy makes less than what I pay someone to mow my yard,” Isaacs said.

Judge to ponder, rule later

Sword said he wanted to review the case before ruling. He is expected to issue a written ruling next week. Isaacs wants Sword to allow Lowe to continue to serve his sentence on probation. Bright wants him jailed.

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Knox County Criminal Court Judge Steven Sword said he would make a written ruling within a week about a violation of probation violation for County Trustee Mike Lowe Thursday, July 12, 2018.(Photo: Michael Patrick/News Sentinel)

Bright has accused Lowe before of hiding money by converting assets such as real estate into cash. Sword has said he suspects the same. But Bright couldn’t prove it.

Knox County Law Director Richard “Bud” Armstrong sued Lowe under the False Claims Act to try to recoup not only the entire $750,000 the Tennessee Bureau of Investigation believes he stole but “treble” damages.

But Knox County Chancellor Clarence Pridemore rejected that bid last year.

Pridemore noted in rulings the plea deal brokered in Lowe's criminal case only required him to repay $200,000, but he did not offer an explanation for refusing to impose damages required under the False Claims Act. Pridemore fined Lowe $7,500 for three separate acts of thievery.

That ruling, if allowed to stand, means Lowe would only have to repay county coffers $207,500.

Ray Mubarak(Photo: Michael Patrick)

Lowe, who served as Knox County trustee for 13 years, admitted via a March 2015 plea deal that he put two friends — Delbert Morgan and Ray Mubarak — on his payroll and authorized overtime, bonuses and benefits for them even though neither did any work for the county.

That scheme robbed county coffers of more than $400,000 in salary and benefits, and a Tennessee Bureau of Investigation report said Morgan and Mubarak gave Lowe a cut of their ill-gotten pay.

Lowe also admitted he funneled title work to a business owned by Mubarak, knowing Mubarak would overcharge the county for the work. Mubarak billed the county nearly $400,000, and the TBI report said Lowe got a cut of that, too.

Although it’s never been made clear why, the plea deal brokered by Isaacs only required Lowe to pay $200,000 in restitution to taxpayers for the title work scheme. He was not required to repay the county the salaries and benefits paid Morgan and Mubarak.